A humorous look at the companies that caught our eye, for better or worse, this week
Hexo Corp. (DOG)
What? Another cannabis company issued disappointing results? It’s almost like this whole marijuana-investing thing was one big, overhyped bubble that was destined to pop at the first sign of trouble. Shares of Hexo got smoked after the company said its fourth-quarter revenue will fall short of analysts’ expectations and withdrew its 2020 sales outlook, citing slower-than-expected retail store openings, pricing pressures and delays in government approvals for cannabis derivative products. Hexo’s warning only added to the gloom surrounding cannabis stocks, which have plunged about 55 per cent in the past year as measured by the Horizons Marijuana Life Sciences Index ETF. Kids, stay away from drugs.
Green Organic Dutchman (DOG)
The stock market fell out of love with marijuana companies months ago. Now, lenders are starting to get cold feet, too. Citing “changing market conditions," cannabis producer Green Organic Dutchman said it was unable to secure bank financing or equipment leasing “on acceptable terms within the time frames required” to complete growing facilities in Ancaster, Ont., and Valleyfield, Que., forcing the company to look for alternative sources of funds. Judging by the massive drop in TGOD’s stock price this week, plenty of investors aren’t waiting around to see how this turns out.
SmileDirectClub investors aren’t smiling now. Weeks after going public, the marketer of teeth-straightening kits got punched in the mouth by short seller Hindenburg Research, which alleged the company is “incinerating” cash, trading at an “absurd” multiple and “putting customer safety at risk” with its devices. SmileDirectClub, which is also facing class-action lawsuits from orthodontists and investors, rejected the claims and said it is the victim of “organized dentistry’s anti-competitive legal actions." With the stock at roughly half of its September IPO price of US$23, investors are picking their teeth up off the floor.
Domino’s Pizza (STAR)
Domino’s Pizza’s results may have been a bit stale, but they still hit the spot for investors. Faced with growing competition from third-party delivery apps, the world’s largest pizza chain by revenues posted U.S. same-store sales growth of 2.4 per cent in the third quarter – the slowest pace of growth in seven years – and said it expects low- to mid-single-digit increases over the next few years. But with the stock down more than 10 per cent in the past year, the company announced that it plans to repurchase up to US$1-billion of its own shares – news that made the mediocre results easier to swallow.
Bed Bath & Beyond (STAR)
Business quiz! Shares of Bed Bath & Beyond surged after the retailer: a) posted strong results, driven by the success of its exciting buy-one-bath-towel-get-a-free-facecloth sales event; b) announced a merger with electronics retailer Best Buy to create Best Bed Buy & Beyond Baths; c) announced that Mark Tritton, Target’s former head of merchandising, is joining Bed Bath & Beyond as chief executive officer, raising hopes that he will strengthen the company’s private-label products and revive its sagging sales growth. Answer: c.